Those stinky gas bears!


From the SMH:

Bears have had a field day the past several months now, pointing to the prospects of a surge in gas exports from North America undercutting the economics of the local projects being developed in both Queensland and off Western Australia.

This correspondent has long felt the fears were overblown.

Now, it seems at least one of the two projects proposed for the US north west, in Oregon, has hit problems, with local government officials denying an application from the Oregon LNG and Oregon Pipeline Co’s application for a proposed LNG.

“The ruling …highlights the important issue that greenfield US LNG export proposals face materially higher commercial and social hurdles than brownfield proposals,” JP Morgan told clients in a note this morning.

“US LNG exports will not have a meaningful impact on the oil linked pricing dynamic that underwrites current and future Australian based LNG projects.”

So far four US-LNG projects have received part of the government approvals needed to proceed, and all are brownfields projects, which have significant economic advantages over greenfield proposals.

There are as many as 14 greenfield proposals which will have higher operating costs along with prospects of a slow or impossibly difficult regulatory process due to local opposition.

Potentially this is good news for the likes of BHP, Woodside, Santos, Origin et al.

Jeez. How many US terminals have been approved recently? Four plus another in Canada. How many have been rejected recently? One. How many are on the drawing board? 20 plus another five in Canada. How many Australian projects have been approved? None. Has Australia signed any major LNG off take deals lately. No. The one deal we have signed for Wheatstone was confidential. It would be a brave assumption to conclude that that was because it was oil-linked.

There are no bears running wild over Australian LNG, only North American projects.

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  1. Russia has their eyes on Asia and will push hard to export there. If Gazprom loses it’s monopoly it will be the cherry on the cake for Asian buyers.

    And while politically unpopular, restarting Japan’s reactors in place of current gas generation is quite likely as industry heads are begging for it and Abe seems on board with its importance for a Japanese recovery.

    Many headwinds in Asia for gas prices, a move by the Chinese to replace coal with the more expensive gas could turn it around, but so far they seem to switching to cleaner coal and nuclear to appease a nation sick of air pollution yet very reliant on low manufacturing costs.

  2. Those massive cost blow outs were just the start. The project is more than 2 years away from shipping first LNG, anything could happen. Even cyclones. Again Chevron made a ballsy decision here.WW

  3. I seldom look at SMH Markets Live. When I do look, its only for the commentary from Allan | Prahran 🙂

    You should get him to guest blog on MB !!